Pathania v Tashie-Lewis and another

Insolvency – Transaction at undervalue. A causation test had no part in the consideration as to whether the criteria in s 423 of the Insolvency Act 1986 had been fulfilled. Accordingly, the deputy master had erred in dismissing the appellant creditor's claim against the second respondent purchaser of a house, under s 423 of the Insolvency Act 1986, alleging that the first respondent debtor's sale of the house to the second respondent (the transaction) had been entered into at an undervalue. The Chancery Division, in allowing the appeal, held that the deputy registrar had erred by applying a test of causation in determining whether s 423 had been satisfied. The court held that it was enough if the transaction sought to be impugned had been entered into with the requisite purpose and that, applying settled law to the facts, the statutory criteria had been satisfied concerning the claim. Accordingly, the second respondent was ordered to pay the appellant £55,102, namely the sum represented by the undervalue.

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